India, UAE to push for investment bond

NEW DELHI: Indicating a sense of political urgency to give wings to a nascent partnership, India and the UAE are trying to get the investment cycle working between the two countries.

After a visit to the UAE by Indian officials last week, four executive directors of the all-powerful Abu Dhabi Investment Authority (ADIA) are visiting India this week on a tour to narrow the search for infrastructure investment in India.

The newly formed National Infrastructure Investment Fund (NIIF), the interlocutor from the Indian side, will be holding discussions with ADIA officials, who will also be travelling to other states to scout for business opportunities.


But there are several hurdles to the UAE’s promised investment seeing the light of day. First, there are legacy issues, like Emaar and Etisalat, that have made the UAE jittery about participating in the Indian growth story again.

Indian officials said most of the earlier issues had been resolved, and they were working to clear up the ones that remained. NIIF, the main vehicle for infrastructure investment, has under 10 people manning it. In order to handle the billions of dollars of investment planned, the government would have to populate it with people who have the requisite domain expertise.

Second, and more important, the body needs to be insulated against the fate of all such quasi-government organisations vulnerable to bureaucratic “capture”.

At this point, there seems to be greater interest in brownfield investments rather than greenfield ones, while Emiratis get accustomed to the Indian system.

In addition, India’s recent practice of frequent changes in tax laws is having an adverse effect. The UAE wants India to give a written guarantee that the tax system on fuel imports into the strategic reserve would not change for some time. It’s unclear whether India is agreeable to that yet.

Senior UAE officials have said that while they wanted to realise the joint vision of the heads of both governments, the Indian bureaucracy was a hurdle to the process.

In the Modi government’s first year in office, senior bureaucrats in the PMO were designated to facilitate investors from Japan and the US who balked at negotiating the formidable babudom. While the UAE does not yet have someone to do this for them, senior officials said, “the PM is the primary facilitator here”. It indicates the tremendous political interest on either side to put economic ballast to this relationship.